Analyzing the Lifespan of 7 Algorithmic & Coupon-Powered Assets
Stablecoins have been a staple of the cryptocurrency industry for quite some time now.
However, typical US Dollar backed (collateralized) stablecoin projects take away from the decentralized nature of the cryptocurrency space as they require trust in the issuing party.
As a result, many projects have popped up in recent months to the ultimate algorithmic asset without the need for collateral.
The arms race is heating up. However, the majority of these assets barely last, and most of them fail with their promises and targets breaking within weeks of launching.
Some of them do prevail.
What are the projects that have been successful so far in creating stable algorithmic assets? Let’s take a look into them;
Red color: marking the day when the drama kicked in and the project got off the rails
Blue: Frax & AMPL keep working as promised
What went wrong?
Fei Protocol
$FEI Protocol went live on April 4th, and its peg quickly collapsed after just three short days of trading. The cryptocurrency never actually managed to reach the $1 peg after launching and went on to collapse as low as $0.75 on April 7th, 2021, just three days after going live.
Mithril Cash
Ouch.
$MIC went live on December 30th, 2020. The algorithmic stablecoin project that relied on shares and bonds managed to survive for a short 16 days before collapsing beneath the first low below $1.00, indicating a peg break on 15th January 2021.
Dynamic Set Dollar
$DSD went live on December 24th, 2020. The cryptocurrency managed to hold above the $1 level for a period of 30days. It was not stable for most of that period, often shooting up as high as $2.50 and then falling back well beneath $1.00. During trading in January, it did seem quite hopeful that $DSD might hold the peg. However, things took a turn for the worst on January 23rd as $DSD collapsed beneath $0.65 as it created a lower low and confirmed the peg was broken.
Basis Cash
$BAC went live on November 30th, 2020. The stablecoin enjoyed a period of 40 days of remaining close to the $1 peg before breaking beneath it on January 9, 2021, when it made a fresh lower low beneath the $1 level.
The Ones That Keep strong
FRAX
$FRAX went live toward the end of 2020 on December 26th. Since then, it has enjoyed a strong run of 106 days of stability in holding its peg. In fact, it has performed remarkably well and only slipped beneath $0.9 for around five days throughout its lifespan so far.
In summary, $FRAX seems to be one of the only successful coupon stablecoins that appears to have worked so far, and it now holds a respectable market cap of around $75 million — putting it in the first 500 cryptos.
Ampleforth
$AMPL is by far the most successful algorithmic asset in existence. It’s NOT a stablecoin, but a nowel asset that has the 2019 CPI-Adjusted US Dollar target price.
Through a daily rebasing property mechanism, the protocol provides incentives for market participants to buy or sell the token. Read more about AMPL rebase here.
$AMPL went live on June 29th, 2019, and has since seen a period of 655+ days of uninterrupted liveliness.
Yes, it swings way above and beyond $1 but that was anticipated. Hear me out:
In the long run, as the $AMPL supply grows by sucking more and more value from across all sectors, the price swings become much less volatile. And since we are still far from that stage, $AMPL swings are expected leaving a huge opportunity for those who pay attention to the rebase mechanism.
Also, if we take the average closing price for $AMPL since its inception (easy to pull that data from coinmarketcap or coingeko) , it shows that $AMPL has been highly successfully hovering around the promised peg with an average price of $1.02.
Source: Ampleforth Dashboard
Ampleforth is the king of algorithmic assets. It’s like Bitcoin but in its own asset class.
And just like people these days preach Bitcoin because of its undisrupted longevity, the same will happen to $AMPL once we’ll realize how important algorithmic assets are in decentralized finance.
